25 June 2009
China's Sinopec deals for Addax
In an effort to hike its production capacity and its reserves, China’s Sinopec said it will pay $7.2 billion to purchase Addax Petroleum.
This deal must still get the approval of regulators. This purchase could buffer China’s largest refiner by capacity against spikes in global crude oil prices that have caused it billions in losses in recent years due to caps on domestic fuel prices.
“We are pleased that Sinopec has recognized the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum,” said Addax Chief Executive Jean Claude Gandur.
China has been out in the industry seeking oil deals to offset its lack of resources. In one case four years ago, China National Offshore Oil Company Ltd. backed out of an $18.5 billion deal for the Unocal Oil Company because of huge turmoil in Washington.
This month, Australia’s Rio Tinto dropped plans for a $19.5 billion investment from Aluminum Corp. of China, or Chinalco, amid a political brouhaha over resource acquisitions by Chinese companies.
Calgary, Alberta-based Addax’s oil and gas exploration and production is mainly in west Africa and the Middle East, including joint operation of the Taq Taq field in Iraq’s self-ruled Kurdish region with Turkey’s Genel Enerji.
Addax officials said the company retains the right to consider any proposals superior to Sinopec’s $46.17 per share offer.
“While Addax Petroleum will cease to be a publicly traded company, we look forward to continuing our business in the countries in which we operate for the benefit of all stakeholders,” Gandur said.
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